2007 (5) TMI 432 - AT - Central Excise

Tribunal overturns duty demand & penalty under Central Excise Act due to duty deposit, not collection

The Tribunal set aside the Order-in-Original confirming duty demand and penalty imposition under Section 11D(2) of the Central Excise Act, 1944. The ... Demand - Cenvat/Modvat - Utilisation of credit Issues involved: Appeal against Order-in-Original confirming duty demand, penalty imposition, and interest recovery u/s 11D(2) of Central Excise Act, 1944.Summary:Issue 1: Duty demand and penalty imposition under Section 11D(2) of Central Excise Act, 1944The appellant, engaged in manufacturing induction furnaces, availed Cenvat credit on raw materials. The department alleged that the appellant passed on unutilized Cenvat credit by inflating the value of spare parts supplied. The Adjudicating Authority confirmed the duty demand and penalty. The appellant contended that they paid and deposited the excise duty shown on invoices. The Tribunal noted that the appellant debited the duty amount before clearing goods, thus discharging the duty liability. Section 11D applies when excess duty is collected but not deposited, which was not the case here. The impugned order was set aside, and the appeal was allowed.Issue 2: Interpretation of Section 11D of Central Excise Act, 1944Section 11D allows duty demand only if excess duty collected is not paid to the government. In this case, the appellant had deposited the duty amount indicated on invoices by debiting the Cenvat credit account. As the provisions of Section 11D did not apply, the impugned order was set aside, and the appeal was allowed.This judgment clarifies the application of Section 11D(2) of the Central Excise Act, 1944 in cases where duty is collected and deposited by the assessee, emphasizing that the section is invoked only when excess duty is collected but not remitted to the government.